I’m reading Strategic Risk Taking: A Framework for Risk Management by Aswath Damodaran.
What an amazing book. I’m going to be blogging about it in the next week or so as I chew through the book and think about what it means.
Risk is a crazy thing: It’s hard to define and easily quantify; it affects everyone (both individuals and businesses); people have a weird relationship with it — it can impact our lives in different ways, depending on what we’re risking and how important it is to us.
And since I write about business and the markets…
For businesses, the problem is compounded: Businesses need to take risks to grow (that’s the traditional idea of how risk impacts business) but also a business needs to understand risk so that it can sell more effectively. When a business knows what risks it is asking its customer to take when busying, the business can adjust its offer, as well as its marketing and sales approach, to help alleviate the risk and encourage the purchase.
Obviously risk is closely associated with being in the financial or real estate markets. It’s impossible to be in the markets and be risk-free and we’ve seen what might be perceived as a higher level of risk in the markets in the past few years, as stock prices and real estate prices have tumbled.
What I like about Damodaran’s book (so far) is the comprehensive approach he takes to exploring risk and he discusses risk for individuals, businesses, and investors. Some of the book can get pretty advanced but it’s a rewarding read if you can push your way through the tricky parts.
Watch for some of my upcoming blogs as I interact with the book (and I’ll update this post whenever I write a new one)…